India: The Real Estate (Regulation And Development) Bill, 2013

Last Updated: 13 August 2013
Article by Sharad Sharma

Most Read Contributor in India, July 2017

After much delay and deliberation The Real Estate Regulation and Development Bill, 2013 ["Bill"] has been approved by the Union Cabinet on June 4, 2013, though this bill is yet to be approved by Parliament i:e lok sabha or the lower house of the parliament and the Rajya Sabha or the upper house of the parliament The bill will be notified as a statute once it receives the assent of the President of India for its implementation across all States and Union Territories in the country.

The passing of this Bill is best stated as a delayed step of the Indian government towards regulation of real estate sector. This Bill aimed to create a Real Estate Regulatory Authority and an Appellate Tribunal that will act as a watchdog for the housing sector, primarily towards protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise.

This bill also aims to provide a uniform regulatory environment in the real estate sector which is laced with black money, corruption, red tapism, land mafias and corruption. The core objective of this Bill are twofold i:e to ensure sale of immovable properties in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.

Applicability of the bill

The proposed Bill has limited its applicability to residential real estate only i.e. housing and any other independent use ancillary to housing. The Bill defines

  • "real estate project" as the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof
  • ''apartment" whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of theallottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment

Major Highlight of the Bill

The provisions of this Bill are applicable only to residential projects.

  • Prior approval before launch and advertisement- This bill contains provisions restricting launch of projects or advertisements unless all approvals are received and all the agents are not expected to facilitate the sale of immovable property which are not registered with the Authority and to maintain books of accounts, records and documents.
  • Mandatory deposit of fund- It makes mandatory upon the promoters to deposit 70 per cent or such lesser per cent as notified by the government to cover the construction cost of the project of funds in a separate bank account to ensure timely completion and prevent fund diversion.
  • Registration of real estate project and real estate agent - The bill also ensures mandatory registration of real-estate projects and real-estate agents with the Authority, except when the land proposed to be developed is less than 1000 square meters. This provision is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by the non-organised broker community.
  • Disclosing of mandatory information - The real - estate agents / developers are now required to disclose material information such as details of the promoters, project, layout plan, plan of development works, land status, carpet area (as opposed to super area) and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc on the Authority's website.
  • Restriction on taking advance - Prohibition on taking more than ten percent as advance from the buyers without a written agreement and also the developers/ agents are required to refund to buyers the full amount in case of delay of projects.
  • Liability/ Penalty – The Bill prescribed for Civil and criminal liability for the contravention of various provisions of the Bill, such as, imprisonment up to three years or a penalty up to ten per cent of the estimated cost of the real estate project for projecting out misleading information in advertisements or prospectus
  • Real estate regulatory authority – The Bill give the power to establish one or more Real Estate Regulatory Authority in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, specifying their functions, powers, and responsibilities to exercise oversight of real estate transactions. The Bill shall also appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest.

Real estate regulatory authority – powers and functions

  • The Authority will act as a nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.
  • The authority shall ensure compliance of the obligations cast upon the promoters and the allottees and to cause an inquiry to be made into compliance of its orders or directions made in exercise of its powers
  • To host and maintain a website of records of all real estate projects within its jurisdiction as database, with all details as provided in the application for registration under the Act, for projects, for which registration has either been granted or cancelled as the case may be;
  • To make recommendations on protection of interest of the allottees, measures to improve the processes and procedures for clearance and sanction of building plans and development projects from the Competent Authority; and construction and maintenance of structurally safe, environmentally sustainable, and low cost buildings, apartments and properties and any other form of assistance or advocacy to promote competition and efficiency in the real estate sector.
  • Regulatory Authority shall have the power to call for information, conduct Investigations, and make inquiry in the affairs of promoters where it considers expedient so to do it
  • Regulatory Authority has the power to Issue directions to promoters and allottees from time to time and such directions are binding on all concerned.
  • Powers of the Regulatory Authority consequent upon lapse of or cancellation of registration of the promoter to recommend to the Competent Authority to have the remaining development works,carried out from the proceeds of the enforcement of bank guarantee and recover charges incurred on the said development works due from the promoter.
  • The Regulatory Authority shall have powers to regulate its own procedure and shall be guided by the principles of natural justice and shall have all the powers as are vested in a Civil Court under the Code of Civil Procedure,1908


  1. Any promoter who fails to register in accordance with the provisions of the Real Estate (Regulation and Development) Bill,2013 shall be punishable with imprisonment for a term which may extend to three years, or a penalty which may extend to ten per cent of the estimated cost of the real estate project, or with both.
  2. If any promoter contravenes any other provisions of this bill, other than that provided above, or the Rules or Regulations made , he shall be liable to a penalty which may extend to five percent of the estimated cost of the real estate project.
  3. Any promoter who willfully fails to comply with orders of the Authority shall be liable to a minimum penalty of one lakh rupees for every day during which such default continues, which may extend to five percent of the estimated cost of the real estate project.
  4. Any promoter who willfully fails to comply with the orders of Appellate Tribunal shall be punishable with imprisonment for a term which may extend to one year or with a penalty which may extend to ten percent of the estimated cost of the real estate project, or with both.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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